Officials: Tarheel lotto won't hurt S.C.

COLUMBIA - S.C. lottery officials insist that there's no reason to panic now that North Carolina's lottery has cleared its last hurdle.

The N.C. Senate on Tuesday finally signed off on creating a lottery after months of stalemate. The N.C. House had approved the law in April, and Gov. Mike Easley is expected to sign it.

The N.C. lottery could start selling scratch-off tickets in six months and begin siphoning back some of the $150 million North Carolinians now spend on the S.C. lottery.

"It's something we knew was probably inevitable," said S.C. Education Lottery Chairman John C.B. Smith. "There certainly may be some strategic issues in how we market ourselves, but it won't change our basic strategy. We'll continue to be successful."

S.C. lottery Director Ernie Passailaigue sees an "Achilles' heel" in the Tarheels' lottery plan - it earmarks a high portion of proceeds for education programs.

That, he said, will translate to smaller payouts for N.C. winners and make South Carolina's games more attractive to border crossers.

According to the N.C. bill approved Tuesday, 35 percent of proceeds must go to education programs.

In South Carolina, about 30 percent goes to education.

S.C. officials say they've conducted research on what N.C. players want and think they will continue to attract a significant number of Tarheels.

"[Lottery players are] going to play where they think they can win, in terms of frequency and size of payout," Passailaigue said.

North Carolina "is going to be challenged if they can't get that prize structure changed."

And at least initially, North Carolina won't have a big money game like South Carolina's Powerball, which draws more and more players as multimillion-dollar jackpots escalate.

South Carolinians along the state line Tuesday seemed to welcome the competition - even those whose business could be drained by a cross-border game.

"A lot of our regular customers have said they'll always come here no matter whether North Carolina gets the lottery or not," said Jackie Birman, cashier at the Shop n' Go in Fort Mill.

"It's not just about the tickets - it's about our relationship with them."

Tondra Jackson, a 41-year-old from Rock Hill, knows a lot of North Carolinians who cross the state line to play South Carolina's games.

"If they're like me, they're going to play both," she said. "I go to church in North Carolina, so yes, when I'm in North Carolina I'll buy a ticket there, just like I used to drive to Georgia before we got it."

Levonel Ratliff, of Charlotte, N.C., might be the type of Tarheel lottery player that S.C. retailers and lottery officials could underestimate.

"I'll be going back and forth, back and forth," said Ratliff, 53, who travels once a week to the Red Rocket store near Fort Mill with his 82-year-old mother, Helen, and 85-year-old father, Floyd, to play the S.C. lottery. "But since North Carolina is closer, I'll probably be there more."

The financial effects of an N.C. lottery could ultimately weigh heavily in the S.C. General Assembly's budget debates.

South Carolina stands to lose as much as $150 million a year in sales to North Carolinians, according to earlier S.C. Education Lottery Commission estimates.

That would be about 16 percent of $953 million in annual lottery sales.

The lottery now pays for a host of programs including K-5 reading initiatives, thousands of college scholarships and professor-recruitment initiatives at the state's research universities.

With scholarships taking up an ever-growing piece of the lottery pie, House Speaker Bobby Harrell, R-Charleston, said lawmakers might have to find other ways to pay for some of those programs.

"The K-12 portion of the lottery has already been eroded too much," Harrell said. "If there are any changes, it should be to the higher education portions of lottery spending."

Like South Carolina, North Carolina plans to spend lottery proceeds on education - public school construction, college scholarships and class-size reduction, and preschool programs.

N.C. lottery opponents, echoing their S.C. counterparts from five years ago, said the games are an inefficient way to raise money and send the message to children that gambling is the way to solve the state's financial problems.

"Is this a lesson we teach our children? 'Don't do your homework, don't work hard, you'll make it rich,'" N.C. Sen. Andrew Brock told his colleagues Tuesday. "It's a poor choice for North Carolina. It's one that we'll regret for a long time."